United Kingdom retail sales grow by a better than expected 2.3% in April

19 May 2017, 04:56 | Isaac Mcdaniel

United Kingdom retail sales grow by a better than expected 2.3% in April

United Kingdom retail sales grow by a better than expected 2.3% in April

United Kingdom retail sales volumes rose 2.3% for April compared with expectations of an increase of around 1.0%.

Average weekly earnings excluding bonuses increased by 2.1%.in the three months to March, while inflation rose by 2.3% in the year to March 2017.

"Anecdotal evidence from retailers suggests that good weather contributed to growth", the ONS said.

In the short term, the sluggish wage growth add to fears that weaker consumer spending will see economic growth slow in coming months, given that inflation picked up to 2.7% in April and so is likely to be exerting a major squeeze on real wages.

Following the report, cable reacted to the upside, breaking 1.30 for the first time since September 2016.

Sterling rose nearly half a cent against the US dollar GBP=D4 after the data, rising above $1.30 for the first time in nearly eight months, and British government bond yields fell to a one-month low. Automakers Peugeot and Renault dropped 1.9% and 0.9%, while tire maker Michelin moved 1.2% lower.

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"An astonishing rise in United Kingdom employment isn't enough to mask the fall in real wages", said ING bank economist James Smith.

'April's figures were always expected to be better than March, because of the timing of the Easter holiday, but economists had forecast a smaller rebound of 1 per cent, and much more subdued annual growth of 2 per cent'. Retail sales declined for the first quarter in seven years in the three months through March.

Inflation in April reached its three-year highest at 2.7 percent, which is above the Bank of England's (BOE) 2-percent inflation target, meaning the central bank now has an opportunity to normalise monetary conditions by raising base interest rates from the current all-time low at 0.25 percent.

The pound's slump since the Brexit vote has ratcheted up everyday prices as manufacturers pass down soaring costs to consumers and imported goods become more expensive.

The think tank expects the unemployment rate to rise from 4.8% at the end of this year to 5.4% in 2018 and 5.8% in 2019.

Analysts had expected April's reading to increase by just 1.0%.

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